An Employment Tribunal has held that the Transfer of Undertakings (Protection of Employment) Regulations 2006 ('TUPE') apply to 'workers' as well as traditional 'employees'. Whilst Employment Tribunal decisions are not binding on other courts, if this decision is correct, only those workers who are truly self-employed (i.e. in business on their own account) are likely to fall outside the scope of TUPE (Dewhurst and ors v (1) Revisecatch Ltd (t/a Ecourier) and (2) City Sprint (UK) Ltd).
What does this mean?
Now, in the context of a transaction where TUPE applies:
- Workers (as well as employees) will automatically transfer from the outgoing employer (transferor) to the new employer (transferee) with their existing contractual and statutory rights, and any changes post-transfer will be restricted;
- Details about transferring workers will need to be included by the transferor in the “employee liability information” which the transferor is required by TUPE to provide to the transferee; and
- Employers will be required to inform and consult with workers about a relevant transfer in the same way as they do with employees (for which failure to do so can result in an award of up to 13 weeks’ pay per affected individual).
Following this decision, outgoing transferors should seek to provide specified information about the transfer to representatives of the affected employees and workers, and to require consultation with those same representatives where “measures”, such as dismissals and contract changes, are envisaged in relation to the transfer. Employers should also be seeking to ensure that the worker population is properly accounted for in any election and consultation process.
However, because unfair dismissal rights still only apply to employees, anyone who cannot demonstrate that they are an employee in the usual sense (i.e. engaged under a contract of employment) will still be unable to bring an unfair dismissal claim, even if they are workers who are otherwise covered by TUPE.
The issue of worker status has been the subject of much case law in recent years, with so-called independent contractors such as couriers, minicab drivers and plumbers all succeeding in claims before the Employment Tribunal that they were "workers" entitled to be paid the national minimum wage and holiday pay, rather than self-employed. It is estimated that up to half a million workers in the UK may still be wrongly classified as self-employed, including consultants and other individuals who had always previously been assumed to have been self-employed. This decision confirms that only those workers who are genuinely self-employed will fall outside the scope of TUPE.
Whilst not binding on other courts, Employment Tribunal decisions are still persuasive. However, it is likely that Revisecatch Ltd (t/a Ecourier) and CitySprint (UK) Ltd will appeal, and they have until early January 2020 to do so. If an appellate court agrees with the Employment Tribunal, this will create a binding precedent. As such, employers are advised to take this decision into account on any transaction where TUPE applies. In some cases, this may be a sensitive issue, such as where businesses taking on contracts or buying businesses will need to consider the potential for liabilities to transfer, but, equally, may not want to treat any such individuals as being covered by TUPE in case it jeopardises any arguments on worker status. Given that scrutiny in the area of worker status is only set to increase with HMRC's forthcoming changes to IR35, please do not hesitate to contact any member of the Addleshaw Goddard Employment Group to discuss any of these issues further.